UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~December 3031, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

Commission File No. 000-51638

GULFSLOPE ENERGY, INC.
(Exact name of registrant as specified in its charter)

Delaware		16-1689008
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1000 Main Street, Suite 2300 Houston, Texas (Address of principal executive offices)		77002 (zip code)
1000 Main St., Suite 2300, Houston, Texas (Address of principal executive offices)		77002 (zip code)

(281) 918-4100
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	GSPE	OTCPK

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, $0.001 par value, on ~~August~~February 1210, ~~2022~~2023, was 1,268,240,346.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Report“”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact included in this communication, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast, “may,” “objective,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, ~~anticipated impact of the COVID-19 outbreak,~~ and other factors that may affect our future results and business, generally, including those discussed in the Company’s periodic reports that are filed with the SEC and available on the SEC’s website (http://www.sec.gov).

Should one or more of these risks occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, to reflect events or circumstances after the date of this communication.

PART I – FINANCIAL STATEMENTS (Unaudited)

~~June~~December 3031, 2022

CONTENTS

PART I – FINANCIAL STATEMENTS	4
Item 1. Financial Statements	4
Condensed Unaudited Balance Sheets	4
Condensed Unaudited Statements of Operations	5
Condensed Unaudited Statement of Stockholders’ Equity	6
Condensed Unaudited Statements of Stockholders’ Equity	6
Condensed Unaudited Statements of Cash Flows	87
Notes to Condensed Unaudited Financial Statements	98
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1614
Item 3. Quantitative and Qualitative Disclosures about Market Risk	2017
Item 4. Controls and Procedures	2017
PART II – OTHER INFORMATION	2219

PART I – FINANCIAL STATEMENTS

Item 1. Financial Statements

GulfSlope Energy, Inc.

Condensed Balance Sheets

(Unaudited)

	June 30, 2022			September 30, 2021
	December 31, 2022			September 30, 2022
Assets
Current Assets
Cash	$	~~245~~63,~~294~~638		$	1135,~~517,522~~381
Prepaid Expenses and Other Current Assets		129,674			54,398
Accounts Receivable, Net		—			12,925
Total Current Assets		374,968			1,571,920
Prepaid Expenses and Other Current Assets		31,726			33,004
Property and Equipment, net		1,030			1,845
Total Current Assets		95,364			181,310
Oil and Natural Gas Properties, Full Cost Method of Accounting, Unproved Properties		9,088,448			12,124,720
Property and Equipment, net		667			848
Total Non-Current Assets		9,089,478			12,126,565
Oil and Natural Gas Properties, Full Cost Method of Accounting, Unproved Properties		5,306,415			5,288,915
Total Assets	$	9,464,446		$	13,698,485
Total Non-Current Assets		5,307,082			5,289,763
Liabilities and Stockholders’ Equity (Deficit)
Total Assets	$	5,402,446		$	5,471,073
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable	$	60229,~~891~~968		$	52135,~~814~~391
Related Party Payable		404,469			404,469
Related Party Accrued Interest Payable		3,~~290~~512,~~635~~343			23,~~961~~401,~~689~~489
Loans from Related Parties		8,725,500			8,725,500
Accrued Interest Payable		~~132~~144,~~480~~769			~~115~~138,~~860~~020
Convertible Notes Payable, net of Debt Discount		~~227~~251,~~000~~258			~~176~~227,~~663~~000
Derivative Financial Instruments		1,~~076~~018,~~295~~523			1959,~~201,656~~222
Total Current Liabilities		1314,~~917~~286,~~270~~830			13,~~638~~991,~~651~~091
Total Liabilities		1314,~~917~~286,~~270~~830			13,~~638~~991,~~651~~091
Commitments and Contingencies
Commitments and Contingencies (Note 9)
Stockholders’ Equity (Deficit)
Stockholders’ (Deficit) Equity
Preferred Stock; par value ($0.001); Authorized 50,000,000 shares none issued or outstanding		—			—
Common Stock; par value ($0.001); Authorized 1,500,000,000 shares; issued and outstanding 1,268,240,346 as of June 30, 2022 and September 30, 2021, respectively		1,268,240			1,268,240
Common Stock; par value ($0.001); Authorized 1,500,000,000 shares; issued and outstanding 1,268,240,346 and 1,268,240,346 as of December 31, 2022 and September 30, 2022, respectively		1,268,240			1,268,240
Additional Paid-in-Capital		59,116,487			5859,~~999~~116,~~585~~487
Accumulated Deficit		(6469,~~837~~269,~~551~~111	)		(6068,~~207~~904,~~991~~745	)
Total Stockholders’ Equity (Deficit)		(4,452,824	)		59,834
Total Stockholders’ (Deficit) Equity		(8,884,384	)		(8,520,018	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	9,464,446		$	13,698,485
Total Liabilities and Stockholders’ (Deficit) Equity	$	5,402,446		$	5,471,073

The accompanying notes are an integral part to these condensed financial statements.

GulfSlope Energy, Inc.

Condensed Statements of Operations

(Unaudited)

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	For the Three Months Ended December 31,
	2022			2021			~~2022~~		~~2021~~
Revenues	$	—		$	—		$	—	$	—
Impairment of Oil and Natural Gas Properties		—			—			3,093,693		—
General and Administrative Expenses		254,705			446,960
General and Administrative Expenses		374,791			381,794			1,180,199		1,137,848
Net Loss from Operations		(254,705	)		(446,960	)
Net Loss from Operations		(374,791)			(381,794)			(4,273,891)		(1,137,848)
Other Income/(Expenses):
Other Income/(Expenses):
Interest Expense, net		(131,040	)		(138,238	)
Interest Expense		(122,314)			(131,495)			(395,903)		(414,674)
Gain on Derivative Financial Instruments		21,379			80,314
Gain (Loss) on Debt Extinguishment		(85,127)			—			(85,127)		136,640
Net Loss Before Income Taxes		(364,366	)		(504,884	)
Gain (Loss) on Derivative Financial Instruments		309,592			148,976			125,361		(307,939)
Provision for Income Taxes		—			—
Net Loss Before Income Taxes		(272,640)			(364,313)			(4,629,560)		(1,723,821)
Net Loss	$	(364,366	)	$	(504,884	)
Provision for Income Taxes		—			—			—		—
Loss Per Share - Basic and Diluted	$	(0.00	)	$	(0.00	)
Net Loss	$	(272,640)		$	(364,313)		$	(4,629,560)	$	(1,723,821)
Weighted Average Shares Outstanding – Basic and Diluted		1,268,240,346			1,268,240,346
Loss Per Share - Basic and Diluted	$	(0.00)		$	(0.00)		$	(0.00)	$	(0.00)
Weighted Average Shares Outstanding – Basic and Diluted		1,268,240,346			1,268,240,346			1,268,240,346		1,267,663,423

The accompanying notes are an integral part to these condensed financial statements.

GulfSlope Energy, Inc.

~~Condensed~~ Statements of Stockholders’ Equity ~~(Deficit)~~

(~~Unaudited~~unaudited)

For the Three Months Ended ~~June~~December 3031, 2022

					Additional					~~Total~~Net
	Common Stock				Paid-in		Accumulated			Stockholders’
	Common				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			~~Deficit~~Equity
Balance at March 31, 2022		1,268,240,346	$	1,268,240	$	59,031,360	$	(64,564,911	)	$	(4,265,311	)
Balance at September 30, 2022		1,268,240,346	$	1,268,240	$	59,116,487	$	(68,904,745	)	$	(8,520,018	)
Extension of Warrants in Conjunction with Extension of Convertible Notes		—		—		85,127		—			85,127
Net Loss		—		—		—		(364,366	)		(364,366	)
Net Loss		—		—		—		(272,640	)		(272,640	)
Balance at December 31, 2022		1,268,240,346	$	1,268,240	$	59,116,487	$	(69,269,111	)	$	(8,884,384	)
Balance at June 30, 2022		1,268,240,346	$	1,268,240	$	59,116,487	$	(64,837,551	)	$	(4,452,824	)

For the Three Months Ended ~~June~~December 3031, 2021

	Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
					Additional
	Common				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance at March 31, 2021		1,268,240,346	$	1,268,240	$	58,848,358	$	(59,341,180	)	$	775,418
Balance at September 30, 2021		1,268,240,346	$	1,268,240	$	58,999,585	$	(60,207,991	)	$	59,834
Stock Based Compensation		—		—		32,550		—			32,550
Stock based compensation		—		—		31,775		—			31,775
Extension of Warrants in Conjunction with Extension of Convertible Notes		—		—		86,902		—			86,902
Net Loss		—		—		—		(504,884	)		(504,884	)
Net Loss		—		—		—		(364,313	)		(364,313	)
Balance at December 31, 2021		1,268,240,346	$	1,268,240	$	59,031,360	$	(60,712,875	)	$	(413,275	)
Balance at June 30, 2021		1,268,240,346	$	1,268,240	$	58,967,810	$	(59,705,493	)	$	530,557

The accompanying notes are an integral part to these condensed financial statements.

GulfSlope Energy, Inc.

Condensed Statements of ~~Stockholders’~~Cash ~~Equity (Deficit)~~Flows

(Unaudited)

For the Nine Months Ended June 30, 2022


	For the Three Months Ended December 31,
	2022			2021
OPERATING ACTIVITIES
Net Loss	$	(364,366	)	$	(504,884	)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation		182			456
Stock Based Compensation		—			31,775
Gain on Derivative Financial Instruments		(21,379	)		(80,314	)
Debt Discount Amortization		13,437			21,844
Changes in Operating Assets and Liabilities:
Accounts Receivable		12,925			—
Prepaid Expenses and Other Current Assets		1,278			(218,473	)
Accounts Payable		94,577			59,092
Accrued Interest Payable		117,603			116,394
Net Cash Used In Operating Activities		(145,743	)		(574,110	)

INVESTING ACTIVITIES
Investments in Oil and Gas Properties		(17,500	)		(19,317	)
Net Cash Used In Investing Activities		(17,500	)		(19,317	)

FINANCING ACTIVITIES
Proceeds From Convertible Promissory Notes		91,500			—
Net Cash Provided By Financing Activities		91,500			—

Net Decrease in Cash		(71,743	)		(593,427	)
Beginning Cash Balance		135,381			1,517,522
Ending Cash Balance	$	63,638		$	924,095

Non-Cash Financing and Investing Activities:
Capital Expenditures in Accounts Payable	$	—			26,253
Debt Discount Related to Issuance of Convertible Promissory Notes		89,179			—

	Common Stock				Additional Paid-In		Accumulated			Total Shareholders’ Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance at September 30, 2021		1,268,240,346	$	1,268,240	$	58,999,585	$	(60,207,991	)	$	59,834
Stock Based Compensation		—		—		31,775		—			31,775
Extension of Warrants in Conjunction with Extension of Convertible Notes		—		—		85,127		—			85,127
Net Loss		—		—		—		(4,629,560	)		(4,629,560	)
Balance at June 30, 2022		1,268,240,346	$	1,268,240	$	59,116,487	$	(64,837,551	)	$	(4,452,824)

For the Nine Months Ended June 30, 2021

	Common Stock				Additional Paid-In		Additional Paid-In Capital Shares to Be			Accumulated			Total Shareholders’ Equity
	Shares		Amount		Capital		Issued			Deficit			(Deficit)
Balance at September 30, 2020		1,250,740,346	$	1,250,740	$	58,728,308	$	105,000		$	(57,981,672	)	$	2,102,376
Common Stock Issued in Settlement of Debt Interest		17,500,000		17,500		87,500		(105,000	)		—			—
Stock Based Compensation		—		—		65,100		—			—			65,100
Extension of Warrants in Conjunction with Extension of Convertible Notes		—		—		86,902		—			—			86,902
Net Loss		—		—		—		—			(1,723,821	)		(1,723,821	)
Balance at June 30, 2021		1,268,240,346	$	1,268,240	$	58,967,810	$	—		$	(59,705,493	)	$	530,557

The accompanying notes are an integral part to these condensed financial statements.

GulfSlope Energy, Inc.

Condensed Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended June 30
	2022			2021
OPERATING ACTIVITIES
Net Loss	$	(4,629,560	)	$	(1,723,821	)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Impairment of Oil and Natural Gas Properties		3,093,693			—
Depreciation		814			5,625
Stock Based Compensation		31,775			65,100
Gain (Loss) on Derivative Financial Instruments		(125,361)			307,939
Debt Discount Amortization		50,337			69,525
Loss (Gain) on Debt Extinguishment		85,127			(136,640	)
Changes in Operating Assets and Liabilities:
Accounts Receivable		—			37,232
Prepaid Expenses and Other Current Assets		(75,277	)		(34,576	)
Accounts Payable		(23,881	)		(187,239	)
Accrued Interest Payable		345,566			345,810
Operating Lease Liabilities		—			2,598
Net Cash Used In Operating Activities		(1,246,767	)		(1,248,447	)
INVESTING ACTIVITIES
Insurance Proceeds Received		—			223,650
Equipment Purchases		—			(2,165	)
Proceeds from Sale of Pipe		—			133,108
Investments in Oil and Gas Properties		(25,461	)		(136,151	)
Net Cash Provided By (Used In) Investing Activities		(25,461	)		218,442
FINANCING ACTIVITIES
Payments on Notes Payable		—			(320,527	)
Net Cash Used In Financing Activities		—			(320,527	)
Net Decrease in Cash		(1,272,228	)		(1,350,532	)
Beginning Cash Balance		1,517,522			3,190,418
Ending Cash Balance	$	245,294		$	1,839,886
Supplemental Schedule of Cash Flow Activities:
Cash Paid for Interest, Net of Amounts Capitalized	$	—		$	424
Non-Cash Financing and Investing Activities:
Capital Expenditures in Accounts Payable	$	31,960		$	1,324
Warrants issued to Extend Maturity of Debt Instrument	$			$	86,902
Common Stock Issued upon Conversion of Convertible Notes Payable and Accrued Interest	$	—		$	105,000

The accompanying notes are an integral part to these condensed financial statements.

GulfSlope Energy, Inc.

Notes to Condensed Financial Statements

~~June~~December 3031, 2022

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

GulfSlope Energy, Inc. (the “Company” or “GulfSlope”) is an independent oil and natural gas exploration company whose interests are concentrated in the United States Gulf of Mexico federal waters offshore Louisiana. The Company currently has under lease one federal Outer Continental Shelf ~~blocks~~block (referred to as “prospect”,” “portfolio” or “leases”) and licensed three-dimensional (3-D) seismic data across its area of concentration. ~~Our lease expires on October 31, 2025.~~

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

The condensed financial statements included herein are unaudited. However, these condensed financial statements include all adjustments (consisting of normal recurring adjustments), which, in the opinion of management are necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for an entire year. The preparation of financial statements in accordance with generally accepted accounting principles ~~generally~~(“GAAP”) ~~accepted~~ in the United States of America ~~(“GAAP”)~~ requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed financial statements and accompanying notes. Actual results could differ materially from those estimates.

Certain information, accounting policies, and footnote disclosures normally included in the financial statements prepared in accordance with ~~GAAP~~generally accepted accounting principles in the United States of America have been omitted pursuant to certain rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed financial statements should be read in conjunction with the audited financial statements for the year ended September 30, ~~2021~~2022, which were included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021~~2022 and filed with the Securities and Exchange Commission on December 29, ~~2021~~2022.

Cash

GulfSlope considers highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. There were no cash equivalents at ~~June~~December 3031, 2022 and September 30, ~~2021~~2022.

Liquidity / Going Concern

The Company has incurred accumulated losses as of ~~June~~December 3031, 2022 of $6469.83 million, has negative working capital of $1314.52 million ~~and~~ and for the ~~nine~~three months ended ~~June~~December 3031, 2022 generated losses of $40.64 million. Further losses are anticipated in developing our business. As a result, there exists substantial doubt about our ability to continue as a going concern. As of ~~June~~December 3031, 2022, we had $0.~~245~~ 06 million of unrestricted cash on hand. The Company estimates that it will need to raise a minimum of $10.0 million to meet its obligations and planned expenditures. The $10.0 million is comprised primarily of capital project expenditures as well as general and administrative expenses. It does not include any amounts due under outstanding debt obligations, which amounted to $12.46 million of current principal and accrued interest as of ~~June~~December 3031, 2022. The Company plans to finance operations and planned expenditures through the issuance of equity securities, debt financings and farm-out agreements, asset sales or mergers. The Company also plans to extend the agreements associated with all loans, the accrued interest payable on these loans, as well as the Company’s accrued liabilities. There are no assurances that financing will be available with acceptable terms, if at all, or that obligations can be extended. If the Company is not successful in obtaining financing or extending obligations, operations would need to be curtailed or ceased, or the Company would need to sell assets or consider alternative plans up to and including restructuring. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Accounts Receivable

The Company records an accounts receivable for operations expense reimbursements due from joint interest partners, and also from normal operations. The Company estimates allowances for doubtful accounts based on the aged receivable balances and historical losses. If the Company determines any account to be uncollectible based on significant delinquency or other factors, the receivable and the underlying asset are assessed for recovery. As of ~~June~~December 3031, 2022 and September 30, ~~2021~~2022, there was no allowance for doubtful accounts receivable. Gross accounts receivable was nil at ~~June~~December 3031, 2022 and approximately $13,000 at September 30, ~~2021~~2022, respectively.

Full Cost Method

The Company uses the full cost method of accounting for its oil and gas exploration and development activities. Under the full cost method of accounting, all costs associated with successful and unsuccessful exploration and development activities are capitalized on a country-by-country basis into a single cost center (“full cost pool”). Such costs include property acquisition costs, geological and geophysical (“G&G”) costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells. Overhead costs, which includes employee compensation and benefits including stock-based compensation, incurred that are directly related to acquisition, exploration and development activities are capitalized. Interest expense is capitalized related to unevaluated properties and wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose. For significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress, interest costs are capitalized. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool.

Proved properties are amortized on a country-by-country basis using the units of production method (“UOP”), whereby capitalized costs are amortized over total proved reserves. The amortization base in the UOP calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization (“DD&A”), estimated future development costs (future costs to access and develop proved reserves), and asset retirement costs, less related salvage value.

The costs of unproved properties and related capitalized costs (such as G&G costs) are withheld from the amortization calculation until such time as they are either developed or abandoned. Unproved properties and properties under development are reviewed for impairment at least quarterly and are determined through an evaluation that considers, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. In countries where proved reserves exist, exploratory drilling costs associated with dry holes are transferred to proved properties immediately upon determination that a well is dry and amortized accordingly. In countries where a reserve base has not yet been established, impairments are charged to earnings. For the three and nine months ended June 30, 2022, the Company has taken an impairment of nil and approximately $3.1 million, respectively. The impairment was for all of the costs associated with one of the Tau Prospect leases that expired on June 30, 2022. The Company continues to actively pursue the development of its remaining unproved properties.

Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly, on a country-by-country basis, utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10% per annum, from proved reserves, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized. If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings. Any such write-down will reduce earnings in the period of occurrence and results in a lower depreciation, depletion and amortization rate in future periods. A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling.

The Company capitalizes exploratory well costs into oil and gas properties until a determination is made that the well has either found proved reserves or is impaired. If proved reserves are found, the capitalized exploratory well costs are reclassified to proved properties. The well costs are charged to expense ~~when~~if the exploratory well ~~costs~~is ~~are~~ determined to be impaired. Capitalized exploratory well costs have been pending the outcome of exploration activities involving the drilling of the Tau No. 2 well (twin well). During the nine months ended June 30, 2022 approximately $3.1 million of these suspended well costs have been impaired. The impairment charge was recorded because without the commencement of drilling the Tau #2 well or a lease extension being granted, one of the Tau Prospect lease blocks expired on June 30, 2022. Since the Tau prospect extends over two lease blocks, costs associated with the remaining Tau lease block remain capitalized.

As of ~~June~~December 3031, 2022, the Company’s oil and gas properties consisted of unproved properties, capitalized costs and no proved reserves.

A combination of Biden administration actions regarding oil and gas exploration on federal lands and world events have placed tremendous pressures on the global supply-demand balance for crude oil and related products resulting in volatile commodity prices. The Company has evaluated the effect of these factors on its business and notes these factors have caused a delay in the plans for the Company’s 2022 drilling program. The Company continues to monitor the economic environment and evaluate the impact on the business.

Asset Retirement Obligations

The Company’s asset retirement obligations will represent the present value of the estimated future costs associated with plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the seabed in accordance with the terms of oil and gas leases and applicable state and federal laws. Determining asset retirement obligations requires estimates of the costs of plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the sea bed as well as estimates of the economic lives of the oil and gas wells and future inflation rates. The resulting estimate of future cash outflows will be discounted using a credit-adjusted risk-free interest rate that corresponds with the timing of the cash outflows. Cost estimates will consider historical experience, third party estimates, the requirements of oil and natural gas leases and applicable local, state and federal laws, but do not consider estimated salvage values. Asset retirement obligations will be recognized when the wells drilled reach total depth or when the production equipment and facilities are installed or acquired with an associated increase in proved oil and gas property costs. Asset retirement obligations will be accreted each period through depreciation, depletion and amortization to their expected settlement values with any difference between the actual cost of settling the asset retirement obligations and recorded amount being recognized as an adjustment to proved oil and gas property costs. Cash paid to settle asset retirement obligations will be included in net cash provided by operating activities from continuing operations in the statements of cash flows. On a quarterly basis, when indicators suggest there have been material changes in the estimates underlying the obligation, the Company reassesses its asset retirement obligations to determine whether any revisions to the obligations are necessary. At least annually, the Company will assess all of its asset retirement obligations to determine whether any revisions to the obligations are necessary. Future revisions could occur due to changes in estimated costs or well economic lives, or if federal or state regulators enact new requirements regarding plugging and abandoning oil and natural gas wells. ~~The Company drilled two well bores in 2018 and 2019 and these wellbores were both plugged with no further cost required and as such, the asset retirement obligation was completely extinguished.~~

Derivative Financial Instruments

The accounting treatment of derivative financial instruments requires that the Company record certain embedded conversion options and warrants as liabilities at their fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date with any change in fair value recorded as income or expense. ~~The~~As ~~Company~~a result ~~estimates~~of ~~the~~entering ~~fair~~into ~~value~~certain ofnote ~~these~~agreements, for which such instruments ~~primarily~~contained ~~using~~a ~~Monte-Carlo~~variable ~~valuation~~conversion ~~models.~~feature ~~The~~with ~~significant~~no ~~assumptions~~floor, ~~used~~the Company has adopted a sequencing policy in accordance with ASC 815-40-35-12 whereby all future instruments issued after ~~estimating~~such ~~the~~variable ~~fair~~conversion ~~value~~feature ~~include~~instruments ~~the~~may ~~exercise~~be ~~price,~~classified ~~volatility~~as ofa ~~the~~derivative ~~stock~~liability ~~underlying~~with the ~~instrument,~~exception ~~risk-free~~of ~~interest~~instruments ~~rate,~~related ~~estimated~~to ~~fair~~share-based ~~value~~compensation ofissued ~~the~~to ~~stock~~employees ~~underlying~~or ~~the~~directors, ~~instrument~~as ~~and~~long as the ~~estimated~~certain ~~life~~variable ofconvertible ~~the~~instruments ~~instrument~~exist.

Basic and Dilutive Earnings Per Share

Basic income (loss) per share (“EPS“”) is computed by dividing net income (loss) (the numerator) by the weighted average number of common shares outstanding for the period (denominator). Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, and convertible notes payable. The number of potential common shares outstanding relating to stock options and warrants, is computed using the treasury stock method. The number of potential common shares related to convertible notes payable is determined using the if-converted method.

As the Company has incurred losses for the three ~~and nine~~ months ended ~~June~~December 3031, 2022, and 2021, the potentially dilutive shares are anti-dilutive and are ~~thus~~ not added into the loss per share calculations. As of ~~June~~December 3031, 2022, and 2021, there were ~~288~~353,~~849~~099,~~968~~ 289 and ~~299~~288,~~064~~396,~~844~~ 467 potentially dilutive shares, respectively.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Recently Adopted~~Recent Accounting Pronouncements Not Yet Adopted

In ~~May~~August ~~2021~~2020, the Financial Accounting Standards Board (“FASB”) issued ~~ASU~~Accounting ~~2021-04,~~Standards ~~Earnings~~Update ~~Per Share~~ (~~Topic 260~~“ASU”), ~~Debt-Modifications~~No. ~~and Extinguishments (Subtopic 470~~2020-~~50)~~06, ~~Compensation-Stock~~Accounting ~~Compensation~~for ~~(Topic~~Convertible ~~718),~~Instruments and ~~Derivatives and Hedging-~~Contracts in an Entity’s Own Equity, ~~(Subtopic 815-40):~~which ~~Issuer’s~~simplifies ~~Accounting~~the accounting for ~~Certain~~certain ~~Modifications~~financial orinstruments ~~Exchanges~~with characteristics of ~~Freestanding~~liabilities ~~Equity-Classified~~and ~~Written~~equity, ~~Call Options.~~including ~~ASU~~convertible ~~2021-04~~instruments ~~provides clarification~~ and ~~reduces~~contracts ~~diversity~~ in an ~~issuer~~entity’s ~~accounting~~own ~~for modifications or exchanges of freestanding~~ equity~~-classified written call options (such as warrants) that remain equity classified after modification or exchange~~. An ~~issuer~~Additionally, ~~measures~~ASU ~~the~~2020-06 ~~effect~~requires ~~of a modification or exchange as~~ the ~~difference~~application ~~between the fair value~~ of the ~~modified or exchanged~~if-converted ~~warrant~~method ~~and~~to calculate the ~~fair~~impact ~~value~~ of ~~that~~convertible ~~warrant~~instruments ~~immediately~~on ~~before~~diluted ~~modification~~earnings orper ~~exchange.~~share ~~ASU~~(EPS), ~~2021-04~~which ~~introduces~~is aconsistent ~~recognition~~with ~~model that comprises four categories of transactions and~~ the ~~corresponding~~ Company’s accounting treatment ~~for~~under ~~each~~the ~~category~~current ~~(equity~~standard. ~~issuance,~~This ~~debt origination,~~standard ~~debt~~is ~~modification,~~effective ~~and~~for ~~modifications~~small ~~unrelated~~reporting tocompanies ~~equity~~who ~~issuance~~adopt ~~and~~the ~~debt~~private ~~origination or modification). ASU 2021-04 is~~Company ~~effective~~rules for ~~all entities for~~ fiscal years beginning after December 15, ~~2021, including interim periods within those fiscal years~~2023. An ~~entity~~The ~~should~~adoption ~~apply~~of ~~the guidance provided in~~ ASU ~~2021~~2020-0406 ~~prospectively to modifications or exchanges occurring on or after the effective date. Early adoption~~ is ~~permitted~~not ~~for~~expected ~~all entities, including adoption in an interim period. If an entity elects~~ to ~~early adopt~~have ~~ASU~~a ~~2021-04~~material inimpact anon ~~interim period,~~ the ~~guidance should be applied as of the beginning of the fiscal year that includes that~~ ~~interim period. The~~ Company’s ~~has~~financial ~~elected~~statements toor ~~early adopt this standard and in accordance with this standard was accounted for prospectively as of the beginning of the year~~disclosures. The early adoption of this standard impacted the accounting for the modification of investor warrants discussed in Note 6 and resulted in the recording of a loss on debt extinguishment of approximately $85,000. Historically the cost associated with the warrant modification was capitalized to deferred loan cost and amortized over the debt extension period.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020. ASU No. 2020-06 can be adopted on either a fully retrospective or modified retrospective basis. The adoption of ASU 2020-06 is not expected to have a material impact on the Company’s financial statements or disclosures.

The Company has evaluated all other recent accounting pronouncements and believes either they are not applicable or that none of them will have a significant effect on the Company’s financial statements.

NOTE 3 – OIL AND NATURAL GAS PROPERTIES

The Company currently has under lease one federal Outer Continental Shelf ~~blocks~~block and has licensed 2.2 million acres of three-dimensional (3-D) seismic data in its area of concentration. Our lease expires on October 31, 2025.

~~The~~As ~~Company, as the operator~~ of ~~two~~December ~~wells~~31, ~~drilled in the United States Gulf of Mexico~~2022, ~~has incurred tangible and intangible drilling costs for~~ the ~~wells~~Company’s inoil ~~process~~ and ~~has~~natural ~~billed~~gas ~~its~~properties ~~working~~consisted ~~interest partners for their respective share~~ of ~~the~~unproved ~~drilling~~properties, ~~costs~~capitalized toexploration ~~date.~~costs ~~The intangible drilling~~ and ~~all~~no ~~other~~proved ~~costs~~reserves. ~~related~~During to the ~~first~~three ~~well~~months ~~have~~ended ~~been~~December ~~impaired. The second well~~31, ~~Tau~~2022, ~~was~~and ~~drilled to a measured depth of 15~~2021,~~254~~ ~~feet, as compared to~~ the ~~originally~~Company ~~permitted~~capitalized ~~29,857 foot measured depth~~$0.018 ~~Producible~~and ~~hydrocarbon~~approximately ~~zones~~$0.05 million ~~were~~to ~~not~~oil ~~established~~and togas ~~that depth~~properties, ~~but hydrocarbon shows were encountered~~respectively. ~~Complex~~During ~~geomechanical~~the ~~conditions~~three ~~required~~months ~~two by-pass~~ended ~~wellbores~~December 31, ~~one sidetrack wellbore~~2022, and ~~eight~~2021, ~~casing~~the ~~strings to reach that depth. Equipment limitations prevented further~~Company ~~drilling~~capitalized ~~operations.~~nil ~~The~~of ~~Company~~interest ~~has~~expense ~~determined that the optimum way~~ to ~~test the Tau Prospect is through a redrill. However, the Biden administration’s actions regarding~~ oil and natural gas ~~exploration~~properties, ~~on federal lands and the volatility of commodity prices have impacted the timing of a potential redrill~~respectively.

As of June 30, 2022, the Company’s oil and natural gas properties consisted of unproved properties, wells in process and no proved reserves. During the nine months ended June 30, 2022 and 2021, an impairment charge of approximately $3.1 million and nil has been recorded. The impairment charge was recorded because without the commencement of drilling the Tau #2 well or a lease extension being granted, one of the Tau Prospect lease blocks expired on June 30, 2022. Interest has not been capitalized for the nine months ended June 30, 2022 and 2021, respectively, and approximately $0.06 million and $0.04 million of general and administrative expenses have been capitalized to oil and natural gas properties for the nine months ended June 30, 2022 and 2021, respectively.

NOTE 4 – RELATED PARTY TRANSACTIONS

During April 2013 through September 2017, the Company entered into convertible promissory notes whereby it borrowed a total of ~~approximately~~ $8~~.7 million~~ ,675,500 from John Seitz, the chief executive officer (“CEO”). The notes are due on demand, bear interest at the rate of 5% per annum, and ~~approximately~~ $5.3,300,000 ~~million~~ of the notes are convertible into shares of common stock at a conversion price equal to $0.12 per share of common stock (the then offering price of shares of common stock to unaffiliated investors). As of ~~June~~December 3031, 2022, the total amount owed to John Seitz is ~~approximately~~ $8,675,500.7 ~~million.~~ This amount is included in loans from related parties within the condensed balance sheets. There iswas approximately $3.5 million and $3.07 million of unpaid interest associated with these loans included in accrued interest payable within the balance sheet as of ~~June~~December 3031, 2022 and 2021, respectively.

On November 15, 2016, a family member of the CEO entered into a $50,000 convertible promissory note with associated warrants (“Bridge Financing”) under the same terms received by other investors (see Note 65). This amount is included in loans from related parties within the condensed balance sheets.

Domenica Seitz, CPA, related to John Seitz, has provided accounting services to the Company through September ~~30,~~ 2020 as a consultant and beginning October 2020 as an employee. ~~During~~The ~~the~~total ~~three~~amount ~~months~~payable ~~ended~~to ~~June~~Domenica ~~30,~~Seitz ~~2022~~is ~~and~~approximately ~~2021~~$346,000 for ~~the~~unpaid past services ~~provided~~as ~~were~~of ~~valued at~~December ~~approximately~~31, ~~$19~~2022 and September 30,~~000~~ 2022, respectively. During the ~~nine~~three months ended ~~June~~December 3031, 2022 and 2021, ~~the~~salary ~~services~~of ~~provided~~approximately ~~were~~$8,900 ~~valued~~and ~~at approximately~~ $5619,000, respectively , was paid.

~~NOTE 5 – NOTE PAYABLE~~10

OnNOTE ~~April~~5 ~~16,~~– ~~2020,~~CONVERTIBLE ~~GulfSlope~~NOTES Energy, Inc. entered into a promissory note (the “Note”) evidencing an unsecured $100,300 loan under the Paycheck Protection Program (the “PPP Loan”). The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The PPP Loan was made through Zions Bancorporation, N.A. dba Amegy Bank (the “Lender”). On December 17, 2020, the PPP Loan plus accrued interest of $662 was formally forgiven in full by the U.S. Small Business Administration. The forgiven loan balance and related interest totaling $100,962 was accounted for as a gain on debt extinguishment in the Condensed Statements of Operations during the three months ended December 31, 2020.PAYABLE

12The Company’s convertible promissory notes consisted of the following as of September 30, 2022 and December 31, 2022.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

	September 30, 2022						December 31, 2022
	Notes		Discount		Notes, Net of Discount		Notes		Discount			Notes, Net of Discount
Bridge Financing Notes	$	227,000	$	—	$	227,000	$	227,000	$	—		$	227,000
2022 Convertible Debenture		—		—		—		100,000		(75,742	)		24,258
Total	$	227,000	$	—	$	227,000	$	327,000	$	(75,742	)	$	251,258

The Company’s convertible promissory notes consisted of the following as of September 30, 2021 and June 30, 2022.

	September 30, 2021							June 30, 2022
	Notes		Discount			Notes, Net of Discount		Notes		Discount			Notes Net of Discount
Bridge Financing Notes	$	227,000	$	(50,337	)	$	176,663	$	227,000	$	—	—	$	227,000
Total	$	227,000	$	(50,337	)	$	176,663	$	227,000	$	—	—	$	227,000

Bridge Financing Notes

Between June and November 2016, the Company issued eleven convertible promissory notes (“Bridge Financing Notes”) with associated warrants in a private placement to accredited investors for total gross proceeds of $837,000, including $222,000 from related parties. These notes and associated warrants had ana ~~initial~~ maturity of one year; ~~however,~~(which ~~the~~has ~~maturity~~been ~~on these notes was~~ extended in ~~the~~at ~~prior year to a~~ maturity ~~date of April 30, 2022. On April 30, 2022 the maturity date of the notes was further extended~~ to April 30, 2024~~. The notes bear~~ ), an annual interest rate of 8% and can be converted at the option of the holder at a conversion price of $0.025 per share. In addition, the convertible notes will automatically convert if a qualified equity financing of at least $3 million occurs before maturity and such mandatory conversion price will equal the effective price per share paid in the qualified equity financing. The note balances as of ~~June~~December 3031, 2022 and September 30, ~~2021~~2022 were $277,000, with unamortized debt discounts of nil ~~and approximately $50~~,~~000,~~ respectively. ~~Debt discount amortization for the three months ended June 30, 2022~~As ~~and~~noted ~~2021 was approximately $7~~above,~~000~~ ~~and~~on ~~$21,000,~~April ~~respectively. Debt discount amortization for the nine months ended June~~ 30, 2022 ~~and 2021 was approximately $50~~,~~000~~ ~~and $26,000, respectively. As noted above,~~ the maturity date related to these notes and associated warrants was extended to April 30, 2024. In consideration for the extension of the notes in April 2022, the Company extended the term of the related warrants until April 30, 2024. ~~The~~and ~~incremental~~recognized ~~fair value of the modified warrants compared to the fair value of the pre-modification warrants at modification date was~~ approximately $85,000 ~~and~~of ~~was recognized as a~~ loss on ~~debt~~ extinguishment inof ~~accordance~~debt ~~with~~when ~~ASC~~the ~~470 and~~incremental ~~ASU~~fair ~~2021-04~~value ~~that~~pre modification was ~~early~~compared ~~adopted~~to inpost ~~2022.~~modification Atand ~~June 30, 2021,~~ the incremental ~~fair~~ value of the modified warrants ~~compared~~was toover ~~the~~10% ~~fair value~~ of the ~~pre-modification~~old ~~warrants~~note ~~at modification date was approximately $87,000~~ and ~~was recognized~~ as ~~debt discount amortized over~~ such the ~~term~~warrants ofwere ~~the~~expensed ~~notes~~immediately.

~~June~~2022 ~~2019~~ Convertible Debenture

In ~~November~~October ~~2020~~2022, the Company ~~made~~entered into a ~~$300,000~~Securities ~~payment~~Purchase inAgreement ~~full~~(“SPA”) under ~~to satisfy~~ the ~~remaining~~terms ~~balance~~ of which the ~~convertible~~Company ~~debenture~~will issue and ~~a gain~~sell onto ~~extinguishment~~Buyers up to an aggregate of ~~debt~~$650,000 ~~was~~of ~~recognized~~convertible indebentures ~~the~~(“Convertible Debentures”). On ~~amount~~October of13, 2022, approximately $3550,~~678.~~000 ~~Debt~~of ~~discount~~Convertible ~~amortization~~Debentures ~~for~~were ~~the~~purchased ~~nine~~upon ~~months~~the ~~ended~~signing ~~June 30,~~of ~~2021~~the ~~was~~SPA ~~approximately~~(the ~~$44,000~~“First Closing”).

~~NOTE~~The 7Convertible –Debentures ~~FAIR~~accrue ~~VALUE~~interest ~~MEASUREMENT~~at eight percent per annum, and no earlier than six months after the issue date, are convertible at the option of the holder into common stock at a conversion rate of 65% of the lowest volume weighted adjusted price (as reported by OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg, LP) for the ten consecutive trading days immediately preceding conversion.

The Company evaluated the conversion feature and concluded that it should be bifurcated and accounted for as a derivative liability due to the variable conversion feature which does not contain an explicit limit on the number of shares that are required to be issued. Accordingly, the embedded conversion feature was recorded at fair value at issuance and will be subsequently remeasured to fair value at each reporting period.

The fair value of the embedded conversion feature was determined utilizing a Geometric Brownian Motion Stock Path Based Monte Carlo Simulation that utilized the following key assumptions:

	Tranche 1 October 13, 2022			Tranche 2 December 5, 2022				Tranche 1 December 31, 2022					Tranche 1 December 31, 2022
Stock Price	$	0.0052			$	0.0041			$	0.0045		$	0.0045
Volatility		158.12	%			156.37	%			168.03	%		159.49	%
Remaining Term		0.98				0.98				0.77			0.91
Risk Free Rate		4.46	%			4.77	%			4.73	%		4.73	%

In addition to the fixed exercise price noted above, the model incorporates the variable conversion price which is simulated as 65% of the lowest trading price within the ten consecutive days preceding presumed conversion.

The Company’s convertible promissory notes consisted of the following as of December 31, 2022. Debt discount amortization for the quarter ended December 31, 2022 was approximately 13,000.

Notes Payable at December 31, 2022	Notes		Discount			Notes, Net of Discount
Bridge Financing Notes	$	227,000	$	—		$	227,000
2022 Convertible Debenture		100,000		(75,742	)		24,258
Total	$	327,000	$	(75,742	)	$	251,258

NOTE 6 – FAIR VALUE MEASUREMENT

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:	Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivative financial instruments as well as warrants to purchase common stock and long-term incentive plan liabilities calculated using the Black-Scholes model to estimate the fair value as of the measurement date.

Level 3:	Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity).

As required by ASC 820-10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

Fair Value on a Recurring Basis

The following table sets forth by level within the fair value hierarchy the Company’s derivative financial instruments that ~~were~~ were accounted for at fair value on a recurring basis as of September 30, ~~2021~~2022 and ~~June~~December 3031, 2022, respectively:

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Other Unobservable Inputs (Level 3)		Total Fair Value as of
Derivative Financial Instrument at September 30, 2021	$	—	$	(1,201,656	)	$	—	$	(1,201,656	)
Derivative Financial Instrument at September 30, 2022	$	—	$	(959,222	)	$	—	$	(959,222	)
Derivative Financial Instrument at June 30 , 2022	$	—	$	(1,076,295	)	$	—	$	(1,076,295	)
Derivative Financial Instrument at December 31, 2022	$	—	$	(1,018,523	)	$	—	$	(1,018,523	)

The change in derivative financial instruments for the ~~nine~~three months ended ~~June~~December 3031, 2022 is as follows:

September 30, 2021 balance	$	(1,201,656	)
September 30, 2022 balance	$	(959,222	)
New derivative instruments issued		—(80,679	)
Derivative instruments extinguished		—
Change in fair value		~~125~~21,~~361~~378
June 30, 2022 balance	$	(1,076,295	)
December 31, 2022 balance	$	(1,018,523	)

Non-recurring fair value assessments include impaired oil and natural gas property assessments and stock-based compensation. AnThere ~~impairment~~was ~~charge~~no impairment ofcharge ~~approximately $3.1 million and nil was~~ recorded for the ~~nine~~quarters ~~months~~ ended ~~June~~December 3031, 2022 and 2021, respectively. The Company recorded stock-based compensation of nil and approximately $3332,000 for the three months ended ~~June~~December 3031, 2022 and 2021, respectively. ~~The Company recorded stock-based compensation of approximately $32,000 and $65,000 for the nine months ended June 30, 2022 and 2021, respectively.~~

NOTE 87 – COMMON STOCK/PAID IN CAPITAL

~~Nine~~The ~~Months~~following ~~Ended~~table ~~June~~summarizes the Company’s outstanding warrants at September 30, ~~2021~~2022 and December 31, 2022, respectively:

In October 2020, the Company issued approximately 17.5 million common shares with a fair value of approximately $0.1 million that were reflected on the September 30, 2020 balance sheet as additional paid in capital – shares to be issued

Warrants	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In years)
Outstanding at September 30, 2022		64,665,000	$	0.040		2.75
Granted		—		—		—
Exercised		—		—		—
Expired		2,200,000	$	0.100		—
Outstanding at December 31, 2022		62,465,000	$	0.023		1.45

~~NOTE 9 – STOCK-BASED COMPENSATION~~ 12

~~Stock-based~~NOTE ~~compensation~~8 ~~cost~~– ~~is measured at the grant date, based on the estimated fair value of the award using the Black Scholes option pricing model, and is recognized over the vesting period. The Company recognized stock~~STOCK-~~based~~BASED compensation of nil and approximately $33,000 for the three months ended June 30, 2022 and 2021, respectively. Of the $33,000 of stock compensation expense for the three months ended June 30, 2021 all was recorded as general and administrative expense. The Company recognized stock-based compensation of approximately $32,000 and $65,000 for the nine months ended June 30, 2022 and 2021, respectively. All of these amounts were recorded as general and administrative expense for each respective period.COMPENSATION

~~The~~Stock-based ~~following~~compensation ~~table~~cost ~~summarizes~~is measured at the grant date, based on the estimated fair value of the award using the Black Scholes option pricing model, and is recognized over the vesting period. The Company’s recognized stock-based ~~option~~compensation ~~activity~~of ~~during~~nil and approximately $32,000 for the ~~nine~~three months ended ~~June~~December 3031, 2022: and 2021, respectively. Of the $32,000 of stock-based compensation recognized for the three months ended December 31, 2021, all was recorded as compensation expense within general and administrative expense.

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In years)
Outstanding at September 30, 2021		146,000,000	$	0.0444
Granted		—		—
Exercised		—		—
Cancelled		—		—
Outstanding at June 30, 2022		146,000,000	$	0.0444		3.02
Vested and expected to vest		146,000,000	$	0.0444		3.02
Exercisable at June 30, 2022		146,000,000	$	0.0444		3.02

The following table summarizes the Company’s stock option activity at September 30, 2022 and for the three months ended December 31, 2022:

As of June 30, 2022, there was no unrecognized stock-based compensation expense.

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In years)
Outstanding at September 30, 2022		146,000,000	$	0.0444		2.8
Granted		—		—		—
Exercised		—		—		—
Cancelled		—		—		—
Outstanding at December 31, 2022		146,000,000	$	0.0444		2.51
Exercisable at December 31, 2022		146,000,000	$	0.0444		2.51

14As of December 31, 2022, there was no unrecognized stock-based compensation expense.

NOTE 109 – COMMITMENTS AND CONTINGENCIES

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. No legal proceedings, government actions, administrative actions, investigations, or claims are currently pending against us or involve the Company.

In July 2018, the Company entered into a 39 month lease for approximately 5,000 square feet of office space in 4 Houston Center in downtown Houston. Annual base rent iswas approximately $94,000 for the first 18 months, increasing to approximately $97,000 and $99,000 respectively during the remaining term of the lease. The lease term ended on September 30, 2021, and the Company entered into a twelve-month lease that ~~can~~ could be terminated with at least 30 days prior written notice. The lease was terminated in August 2022, and the company made alternative arrangements and entered into a new month to month lease.

The Company reached an agreement in August 2018 for the settlement of approximately $1 million in debt owed to a third party. ~~As required~~ ~~under~~The ~~the~~vendor ~~terms~~was ofpaid ~~the~~$150,000 in ~~settlement~~cash, ~~the~~future ~~Company~~cash ~~made~~payments ~~a payment~~ of ~~approximately~~ $~~0.16 million in cash~~ 7,500 and 10 million shares of ~~common~~ ~~stock~~GulfSlope ~~at such time~~common stock. The agreement ~~also~~contains ~~contained~~ a provision ~~such~~ that upon the sale of the common stock ~~by the holder,~~ if the ~~proceeds~~original ~~received~~debt ~~were~~is not ~~sufficient to~~ fully ~~satisfy the original debt balance~~satisfied, full ~~additional~~ payment ~~by the Company~~ will be made, under a mutually agreed payment plan. If the stock is sold for a gain any surplus in excess of $1.3 million shall be a credit against future purchases from the vendor. The agreement was determined to meet the definition of a derivative in accordance with ASC 815. At ~~June~~On December 31, 2022 and September 30, 2022, there is a ~~derivative~~fair ~~financial~~value ~~instrument~~ liability ~~recorded~~ of approximately $~~0.8~~781,000 ~~million~~and ~~related~~$784,000, respectively, towhich ~~this agreement~~is included within Derivative Financial Instruments on the condensed balance sheet.

NOTE 1110 – SUBSEQUENT EVENTS

~~The Company~~A ~~completed~~convertible apromissory ~~review~~note ~~and~~facility ~~analysis~~for ofup ~~all~~to ~~events~~$125,000 ~~that~~was ~~occurred~~transacted ~~after~~with ~~the~~a ~~condensed~~related ~~balance~~party ~~sheet~~in ~~date~~February to2023. ~~determine~~Through ifthe ~~any such~~date ~~events~~of ~~must~~this befiling $65,000 ~~reported and~~ has ~~determined~~been ~~that there are no other subsequent events to be disclosed~~borrowed.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

The following discussion and analysis should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and the notes to those financial statements included in Item 1 of this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, such as those statements that address activities, events or developments that we expect, believe or anticipate will or may occur in the future. These statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Known material risks that may affect our financial condition and results of operations are discussed in Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended September 30, ~~2021~~2022 and this Quarterly Report on Form 10-Q, Part II, Item 1A, Risk Factors, and may be discussed or updated from time to time in subsequent reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We assume no obligation, nor do we intend to update these forward-looking statements. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “GulfSlope” “we,” “us,” “our” and the “Company” refer to GulfSlope Energy, Inc.

Overview

GulfSlope Energy, Inc. is an independent crude oil and natural gas exploration and production company whose interests are concentrated in the United States Gulf of Mexico federal waters. We are a technically driven company, and we use our licensed 2.2 million acres of advanced three-dimensional (“3-D”) seismic data to identify, evaluate, and acquire assets with attractive economic profiles. GulfSlope Energy commenced commercial operations in March 2013. GulfSlope Energy was originally organized as a Utah ~~corporation~~ corporation in 2004 and became a Delaware corporation in 2012. We have focused our operations in the US Gulf of Mexico because we believe this area provides us with favorable geologic and economic conditions, including multiple reservoir formations, comprehensive geologic databases, extensive infrastructure, relatively favorable royalty regime, and an attractive acquisition market and because our management and technical teams have significant experience and technical expertise in this geologic province. Additionally, we licensed 2.2 million acres of advanced 3-D seismic data, a significant portion of which has been enhanced by new, state-of-the-art reprocessing and noise attenuation techniques including reverse time migration depth imaging. We have used our broad regional seismic database and our reprocessing efforts to generate and high-grade oil and natural gas prospects. The use of our extensive seismic database, coupled with our ability, knowledge, and expertise to effectively reprocess this seismic data, allows us to further optimize our drilling operations and to effectively evaluate acquisition and joint venture opportunities. We consistently assess our prospect inventory in order to deploy capital as efficiently as possible. We have given preference to areas with water depths of 450 feet or less where production infrastructure already exists, which will allow for any discoveries to be developed rapidly and cost effectively with the goal to reduce economic risk while increasing returns

We have ~~historically~~focused ~~operated~~ our ~~business~~operations in the Gulf of Mexico because we believe this area provides us with ~~working~~favorable ~~capital~~geologic ~~deficits~~and economic conditions, including multiple reservoir formations, comprehensive geologic databases, extensive infrastructure, relatively favorable royalty regime, and ~~these~~an ~~deficits~~attractive ~~have~~acquisition ~~been~~market ~~funded~~and bybecause ~~equity~~our management and ~~debt~~technical ~~investments~~teams have significant experience and ~~loans~~technical ~~from~~expertise ~~management.~~in Asthis ofgeologic ~~June~~province. 30Additionally, ~~2022,~~ we ~~had~~licensed $02.~~245~~2 million acres of ~~cash~~advanced on3-D ~~hand.~~seismic ~~The~~data, ~~Company~~a significant ~~estimates~~portion ~~that~~of itwhich ~~will~~has ~~need to~~been ~~raise~~enhanced aby ~~minimum~~new, state-of-the-art ~~$10~~reprocessing and noise attenuation techniques including reverse time migration depth imaging.0 ~~million~~We tohave ~~meet~~used ~~its~~our ~~obligations~~broad regional seismic database and ~~planned~~our ~~expenditures~~reprocessing ~~through~~efforts ~~August~~to ~~2023~~generate and high-grade oil and natural gas prospects. The ~~Company~~use ~~plans~~of toour extensive seismic database, coupled with our ability, knowledge, ~~finance~~and expertise to effectively reprocess this seismic data, allows us to further optimize our operations and ~~planned~~to ~~expenditures~~effectively ~~through~~evaluate acquisition ~~equity~~ and~~/or~~ ~~debt~~joint ~~financings,~~venture ~~farm-out~~opportunities. ~~agreements,~~We consistently assess opportunities for drilling and~~/or~~ ~~other~~producing ~~transactions~~property acquisitions in order to deploy capital as efficiently as possible. We have given preference to areas with water depths of 450 feet or less ~~There~~where ~~are~~production noinfrastructure ~~assurances~~already ~~that~~exists, ~~financing~~which will allow for any discoveries to be ~~available~~developed rapidly and cost effectively with ~~acceptable~~the ~~terms,~~goal ifto atreduce ~~all~~economic risk while increasing returns.

We have historically operated our business with working capital deficits and these deficits have been funded by equity and debt investments and loans from management. As of December 31, 2022, we had $0.06 million of cash on hand. The Company estimates that it will need to raise a minimum of $10.0 million to meet its obligations and planned expenditures through February 2024 assuming execution of our prospect drilling and acquisition strategy. The Company plans to finance operations and planned expenditures through equity and/or debt financings, farm-out agreements, and/or other transactions. There are no assurances that financing will be available with acceptable terms, if at all.

Competitive Advantages

Experienced management. Our management team has a track record of finding, developing and producing oil and natural gas in various hydrocarbon producing basins including the US Gulf of Mexico. Our team has significant experience in acquiring and operating oil and natural gas producing assets worldwide with particular emphasis on conventional reservoirs. We deployed a technical team with over 150 years of combined industry experience finding and developing oil and natural gas in the development and execution of our technical strategy. We believe the application of advanced geophysical techniques on a specific geographic area with unique geologic features such as conventional reservoirs whose trapping configurations have been obscured by overlying salt layers provides us with a competitive advantage.

Advanced seismic image processing. Commercial improvements in 3-D seismic data imaging and the development of advanced processing algorithms, including pre-stack depth, beam, and reverse time migration have allowed the industry to better distinguish hydrocarbon traps and identify previously unknown prospects. Specifically, advanced processing techniques improve the definition of the seismic data from a scale of time to a scale of depth, thus locating the images in three dimensions. The Company has invested significant technical person hours in the reprocessing and interpretation of seismic data. We believe the proprietary reprocessing and interpretation and the contiguous nature of our licensed 3-D seismic data gives us an advantage over other exploration and production companies operating in our core area.

1614

Industry leading position in our core area. We have licensed 2.2 million acres of 3-D seismic data which covers over 440 Outer Continental Shelf (“OCS”) Federal lease blocks on the highly prolific Louisiana outer shelf, offshore US Gulf of Mexico. We believe the proprietary and state-of-the-art reprocessing of our licensed 3-D seismic data, along with our proprietary and leading-edge geologic depositional and petroleum trapping models, gives us an advantage in identifying and high grading drilling and acquisition opportunities in our core area.

Technical Strategy

We believe that a major obstacle to identifying potential hydrocarbon accumulations globally has been the inability of seismic technology to accurately image deeper geologic formations because of overlying massive, extensive, and complex salt bodies. Large and thick laterally extensive subsurface salt layers highly distort the seismic ray paths traveling through them, which often has led to misinterpretation of the underlying geology and the potential major accumulations of oil and gas. We believe the opportunity exists for a technology-driven company to extensively apply advanced seismic acquisition and processing technologies, with the goal of achieving attractive commercial discovery rates for exploratory wells, and their subsequent appraisal and development, potentially having a very positive impact on returns on invested capital. These tools and techniques have been proven to be effective in deep water exploration and production worldwide, and we are using them to identify and drill targets below the salt bodies in an area of the shallower waters of the US Gulf of Mexico where industry activity has largely been absent for over 20 years. GulfSlope ~~management~~ management led the early industry teams in their successful efforts to discover and develop five new fields below the extensive salt bodies in our core area during the 1990’s, which have produced over 125 million barrels of oil equivalent.

Our technical approach to exploration and development is to deploy a team of highly experienced geo-scientists who have current and extensive understanding of the geology and geophysics of the petroleum system within our core area, thereby decreasing the traditional timing and execution risks of advancing up a learning curve. For data licensing, re-processing and interpretation, our technical staff has prioritized specific geographic areas within our 2.2 million acres of seismic coverage, with the goal to optimize capital outlays.

Modern 3-D seismic datasets with acquisition parameters that are optimal for improved imaging at multiple depths are readily available in many of these sub-basins across our core area and can be licensed on commercially reasonable terms. The application of state-of-the-art seismic imaging technology is necessary to optimize delineation of prospective structures and to detect the presence of hydrocarbon-charged reservoirs below many complex salt bodies. An example of such a seismic technology is reverse time migration, which we believe to be the most accurate, fastest, and yet affordable, seismic imaging technology for critical depth imaging available today.

Lease and Partner Strategy

Our prospect identification and analytical strategy is based on a thorough understanding of the geologic trends within our core area. Exploration efforts have been focused in areas where lease acquisition opportunities are readily available. We entered into two master 3-D license agreements, together covering approximately 2.2 million acres and we have completed advanced processing on select areas within this licensed seismic area exceeding one million acres. We can expand this coverage and perform further advanced processing, both with currently licensed seismic data and seismic data to be acquired. We have sought to acquire and reprocess the highest resolution data available in the potential prospect’s direct vicinity. This includes advanced imaging information to further our understanding of a particular reservoir’s characteristics, including both trapping mechanics and fluid migration patterns. Reprocessing is accomplished through a series of model building steps that incorporate the geometry of the geology to optimize the final image. Our integration of existing geologic understanding and enhanced seismic processing and interpretation provides us with unique insights and perspectives on existing producing areas and especially underexplored formations below and adjacent to salt bodies that are highly prospective for hydrocarbon production.

We currently hold one lease, and we are evaluating the acquisition of additional leases in our core area. Our lease has a five-year primary term, ~~expiring~~plus a three year extension and the lease expires on October 31, 2025. The Bureau of Ocean Energy Management’s (“BOEM”) regulatory framework provides multiple options for leaseholders to apply to receive extensions of lease terms under specified conditions. GulfSlope is exploring all options contained in BOEM’s regulatory framework to extend the terms of the ~~lease~~leases. Additional prospective acreage can be obtained through ~~future~~ lease sales, farm-in, or purchase. As is consistent with a prudent and successful exploration approach, we believe that additional seismic licensing, acquisition, processing, and/or interpretation may become highly advantageous, to more precisely define the most optimal drillable location(s), particularly for development of discoveries.

~~Acquisition~~Our plan has been to partner with other entities which could include oil and gas companies and/or financial investors. Our goal is to ~~Strategy~~diversify risk and minimize capital exposure to drilling costs. We expect a portion of our drilling costs to be paid by our partners through these transactions, in return for our previous investment in prospect generation and delivery of an identified prospect on acreage we control. Such arrangements are a commonly accepted industry method of proportionately recouping pre-drill cost outlays for seismic, lease costs, and associated interpretation expenses. We cannot assure you, however, that we will be able to enter into any such arrangements on satisfactory terms.

~~We are~~Merger encouraged by a combination of macroeconomic factors that make the US Gulf of Mexico an attractive target for producing property acquisitions. Transaction activity has remained low despite the ongoing recovery of commodity prices for oil and ~~gas.~~Acquisition Current holders of production are dominated by the historically active major oil and gas companies and a smaller set of pure play companies. Compelling motivations exist for many of these companies to divest, as US Gulf of Mexico producing assets may no longer be core holdings, given the competition for capital within their portfolios. Multiple existing holders of production have stated their intention to exit the US Gulf of Mexico. GulfSlope is a proven qualified operator in the US Gulf of Mexico and the management team has broad and deep offshore experience. Strategy

17We believe there is an opportunity to consolidate oil and gas assets located in the offshore Gulf of Mexico. Multiple oil and gas companies have explicitly stated their intentions to exit the Gulf of Mexico and we believe that GulfSlope is well positioned to take advantage of these opportunities due to our highly specialized subsurface and engineering capabilities, relevant operational experience, and regional knowledge and expertise. We have developed a significant pipeline of potential acquisition opportunities with the following characteristics: (i) strong cash flow, (ii) inventory of low-risk capital projects, and (iii) manageable plugging and abandonment liabilities. In addition to asset acquisitions, we are also evaluating the combination of GulfSlope with other GOM oil and gas companies. Any merger or acquisition is likely to be financed through the issuance of debt and equity securities.

Accordingly, we continue to identify and evaluate potential producing property acquisitions in the offshore US Gulf of Mexico, taking advantage of our highly specialized subsurface and engineering capabilities, knowledge, and expertise. Any merger or acquisition is likely to be financed through the issuance of debt and/or equity securities. 15

Drilling and other Exploratory and Development Strategies

Our plan has been to partner with other entities which could include oil and gas companies and/or financial investors. Our goal is to diversify risk and minimize capital exposure to exploration drilling costs. We expect a portion of our exploration costs to be paid by our partners through these transactions, in return for our previous investment in prospect generation and delivery of an identified prospect on acreage we control. Such arrangements are a commonly accepted industry method of proportionately recouping pre-drill cost outlays for seismic, land, and associated interpretation expenses. We cannot assure you, however, that we will be able to enter into any such arrangements on satisfactory terms. In any drilling, we expect that our retained working interest will be adjusted based upon factors such as geologic risk and well cost. Early monetization of a discovered asset or a portion of a discovered asset is an option for the Company as a means to fund development of additional exploration projects as an alternative to potential equity or debt offerings. However, if a reasonable value were not received from the market at the discovery stage, then we may elect to retain (subject to lease terms) the discovery asset undeveloped, until a reasonable offer is received in line with our perceived market value, or we may elect to seek development partners on a promoted basis in order to substantially reduce capital development requirements.

Recent Developments

~~The~~During ~~turmoil of~~ the past ~~few~~fiscal ~~years regarding the Covid 19 pandemic~~year, the ~~wild~~Company ~~swings~~has inconducted ~~commodity~~engineering, ~~pricing~~geotechnical and ~~the~~economic ~~actions~~evaluations ~~taken by the Biden administration actively opposing oil and gas activities~~ on ~~Federal~~a ~~lands,~~total ~~have~~of ~~all~~10 ~~combined to create great uncertainty~~producing ~~and~~property ~~confusion regarding future industry activity in exploration for new reserves of oil and gas. At the present time~~acquisitions, ~~the~~all ~~Company has~~located ~~been unable to secure adequate terms for partnering~~ in the ~~redrill~~Gulf of ~~the Tau well~~Mexico. The Company ~~believes~~submitted ~~that~~bids ~~the~~on ~~current shortages~~four of ~~oil~~those ~~and~~opportunities, ~~gas~~one ~~will force the re-evaluation~~ of ~~the industry pause in exploration activity, and accordingly has shifted~~which ~~its~~was ~~focus~~deemed ~~to the re~~non-~~drill~~competitive ofby the ~~Tau~~seller. ~~Prospect~~The ~~from~~Company ~~the~~is ~~second~~currently ~~lease~~engaged onin ~~which~~seeking ~~more~~debt ~~time~~and ~~exits~~equity tofinancing ~~conduct~~for ~~this~~the ~~activity. This lease~~remaining ~~expires in 2025~~opportunities.

The Company has been and continues to be active in the evaluation of potential mergers and producing property acquisitions that it deems attractive opportunities. Any such merger or acquisition is likely to be financed through a combination of debt and equity. As a qualified operator in the U S Gulf of Mexico, the Company has the ability to acquire operated production.

The Company is in the process of raising capital to cover general and administrative expenses for the next 15 months.

Significant Accounting Policies

The Company uses the full cost method of accounting for its oil and gas exploration and development activities. Under the full cost method of accounting, all costs associated with successful and unsuccessful exploration and development activities are capitalized on a country-by-country basis into a single cost center (“full cost pool“”). Such costs include property acquisition costs, geological and geophysical (“G&G”) costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells. Overhead costs, which includes employee compensation and benefits including stock-based compensation, incurred that are directly related to acquisition, exploration and development activities are capitalized. Interest expense is capitalized related to unevaluated properties and wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose. For significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress, interest costs are capitalized. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool.

The costs of unproved properties and related capitalized costs (such as G&G costs) are withheld from the amortization calculation until such time as they are either developed or abandoned. Unproved properties and properties under development are reviewed for impairment at least quarterly and are determined through an evaluation by management and third-party consultants considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. In countries where proved reserves exist, exploratory drilling costs associated with dry holes are transferred to proved properties immediately upon determination that a well is dry and amortized accordingly. In countries where a reserve base has not yet been established, impairments are charged to earnings.

The Company capitalizes exploratory well costs into oil and gas properties until a determination is made that the well has either found proved reserves or is impaired. If proved reserves are found, the capitalized exploratory well costs are reclassified to proved properties. The well costs are charged to expense ~~when~~if the exploratory well ~~costs~~is ~~are~~ determined to be impaired. Capitalized exploratory well costs have been pending the outcome of exploration activities involving the drilling of the Tau No. 2 well (twin well). During the quarter ended March 31, 2022 approximately $3.1 million of these suspended well costs have been impaired. The impairment charge was recorded because without the commencement of drilling the Tau #2 well or a lease extension being granted, one of the Tau Prospect lease blocks expired on June 30, 2022. Since the Tau prospect extends over two lease blocks, costs associated with the remaining Tau lease block remain capitalized.

As of ~~June~~December 3031, 2022, the Company’s oil and gas properties consisted of unproved properties, capitalized costs and no proved reserves.

Property and equipment are carried at cost. We assess the carrying value of our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

There has been no change to our critical accounting policies as included in our annual report on Form 10-K as of September 30, ~~2021~~2022, which was filed with the Securities and Exchange Commission on December 29, ~~2021~~2022.

Three Months Ended ~~June~~December 3031, 2022, Compared to Three Months Ended ~~June~~December 3031, 2021

There was no revenue during the three months ended ~~June~~December 3031, 2022 and 2021. WeGeneral ~~incurred~~and noadministrative ~~impairment~~expenses ofwere ~~oil~~approximately $0.3 ~~and~~million ~~natural gas properties~~ for the three months ended ~~June~~December 3031, 2022, ~~and~~compared ~~2021.~~to ~~General and administrative expenses were~~ approximately $0.4 million for the three months ended ~~June 30~~December 31, ~~2022, and~~ 2021. Net interest expense was approximately $~~0.1~~131,000 for the three months ended ~~June~~December 3031, 2022 ~~and~~ ~~2021.~~as ~~Loss~~compared onto ~~debt extinguishment was~~ approximately $~~0.1~~138,000 ~~million~~ for the three months ended ~~June~~December 3031, ~~2022 and nil for the three month ended June 30,~~ 2021~~, respectively~~. Gain on derivative financial instruments was approximately $~~0.3~~21,000 ~~million~~and $80,000 for the ~~three~~ three months ended ~~June~~December 3031, 2022 and ~~approximately~~2021, ~~$0.1~~respectively, ~~million~~which ~~for~~was caused by the ~~three~~change ~~months~~in ~~ended~~fair ~~June~~value ~~30,~~of ~~2021~~the underlying derivative financial instruments.

Nine Months Ended June 30, 2022, Compared to Nine Months Ended June 30, 2021

There was no revenue during the nine months ended June 30, 2022 and June 30, 2021. We incurred approximately $3.1 million of impairment of oil and natural gas properties for the nine months ended June 30, 2022 and nil for the nine months ended June 30, 2021. This is due to the expiration of our oil and gas lease and the write off of a portion of the capitalized costs of our Tau prospect during the quarter ended March 31, 2022. General and administrative expenses were approximately $1.2 million for the nine months ended June 30, 2022, compared to approximately $1.1 million for the nine months ended June 30, 2021. Interest expense was approximately $0.4 million for the nine months ended June 30, 2022 and June 30, 2021. No interest was capitalized for the quarter ended June 30, 2022 or 2021, respectively. Loss on debt extinguishment was approximately $0.1 million for the nine months ended June 30, 2022 and a gain on debt extinguishment of approximately $0.1 million for the nine months ended June 30, 2021. Gain on derivative financial instrument was approximately $0.1 million for the nine months ended June 30, 2022 compared to a loss of approximately $0.3 million for the nine months ended June 30, 2021.

Liquidity and Capital Resources

The Company has incurred accumulated losses for the period from inception to ~~June~~December 3031, 2022, of approximately $6469.83 million, and ~~has~~ has a negative working capital of $1314.52 million. For the ~~nine~~three months ended ~~June~~December 3031, ~~2021~~2022, the Company has generated losses of approximately $40.64 million and net cash used in operations of approximately $10.21 million. As of ~~June~~December 3031, 2022, there was $0.~~245~~06 million of cash on hand. The Company estimates that it will need to raise a minimum of $10 million to meet its obligations and planned expenditures through ~~August~~February ~~2023~~2024. The $10 million is comprised primarily of capital project expenditures as well as general and administrative expenses. It does not include any amounts due under outstanding debt obligations and accrued interest, which amounted to approximately $12.46 million as of ~~June~~December 3031, 2022. The Company plans to finance operations and planned expenditures through the issuance of equity securities, debt financings, farm-out agreements, mergers or other transactions. Our policy has been to periodically raise funds through the sale of equity on a limited basis, to avoid undue dilution while at the early stages of execution of our business plan. Short term needs have been historically funded through loans from executive management. There are no assurances that financing will be available with acceptable terms, if at all. If the Company is not successful in obtaining financing, operations would need to be curtailed or ceased. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

For the ~~nine~~three months ended ~~June~~December 3031, 2022 ~~and 2021~~, the Company used approximately $10.21 million of net cash in operating activities~~. For the nine months ended June 30~~, ~~2022,~~compared with approximately $0.036 million of net cash ~~was~~ used in ~~investing~~operating activities ~~compared~~for ~~with~~the ~~approximately $0.2~~three ~~million~~months ofended ~~cash~~December ~~provided~~31, by2021. ~~investing~~For ~~activities for~~ the three ~~nine~~ months ended ~~June~~December 3031, 2022 and 2021, approximately $0.02 million of cash was used in investing, respectively. For the three ~~nine~~ months ended ~~June 30~~December 31, 2022, the Company ~~used~~received ~~nil in financing activities compared with~~ approximately $0.309 million of net cash ~~used~~from in financing activities compared inwith ~~payment~~nil ~~of notes payable~~ for the ~~nine~~three months ended ~~June~~December 3031, 2021.

The Company will need to raise additional funds to cover planned expenditures, as well as any additional, unexpected expenditures that we may encounter. Future equity financings may be dilutive to our stockholders. Alternative forms of future financings may include preferences or rights superior to our common stock. Debt financings may involve a pledge of assets and will rank senior to our common stock. We have historically financed our operations through private equity and debt financings. We do not have any credit or equity facilities available with financial institutions, stockholders or third-party investors, and will continue to rely on best efforts financings. The failure to raise sufficient capital could cause us to cease operations, or the Company would need to sell assets or consider alternative plans up to and including restructuring.

Off-Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive and principal financial officers, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our principal executive and principal financial officers, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our principal executive and principal financial officers concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

20As noted in the Company’s Annual Report on Form 10-K for the year ended September 30, 2022, the design and operating effectiveness of our controls were adequate to ensure that certain account analysis and accounting judgments related to certain estimates throughout the year were properly accounted for and reviewed in a timely manner.

As noted in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021, the design and operating effectiveness of our controls were adequate to ensure that certain account analysis and accounting judgments related to certain estimates throughout the year were properly accounted for and reviewed in a timely manner.

Limitations on the Effectiveness of Controls

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company’s financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter covered by this Report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2118

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. No legal proceedings, government actions, administrative actions, investigations or claims are currently pending against us or involve the Company.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading Part I, Item 1A. “Risk Factors” included in our September 30, ~~2021~~2022 Annual Report, and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. The risks and uncertainties described below should be read together with those disclosed in our ~~2021~~2022 Form 10-K, Annual Report filed with the SEC on December 29, ~~2021~~2022 and our other SEC filings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

2219

Item 6. Exhibits

The following exhibits are attached hereto or are incorporated by reference:

Exhibit No.		Description
3.1		Amended and Restated Certificate of Incorporation of GulfSlope Energy, Inc., dated effective September 30, 2022 incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed ~~May~~October 244, ~~2018.~~2022
3.2		Amended and Restated Bylaws of GulfSlope Energy, Inc., incorporated by reference to Exhibit 3.2 of Form 10-Q for the quarter ended June 30, 2014.
4.1		Common Stock Specimen, incorporated by reference to Exhibit 4.1 of Form 10-K for the year ended September 30, 2012.
31.1(1)		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(1)		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(2)		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(2)		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(3)		XBRL Instance Document.
101.SCH(3)		XBRL Schema Document.
101.CAL(3)		XBRL Calculation Linkbase Document.
101.DEF(3)		XBRL Definition Linkbase Document.
101.LAB(3)		XBRL Label Linkbase Document.
101.PRE(3)		XBRL Presentation Linkbase Document.

(1)	Filed herewith.
(2)	Furnished herewith.
(3)	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

2320

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

GULFSLOPE ENERGY, INC.

		GULFSLOPE ENERGY, INC.
		(Issuer)

Date:	February 14 ,2023	By:	/s/ John N. Seitz
			John N. Seitz, Chief Executive Officer, and Chairman

~~(Issuer)~~21

Date:	08/15/2022	By:	/s/ John N. Seitz
			John N. Seitz, Chief Executive Officer, and Chairman

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

GULFSLOPE ENERGY, INC.

		GULFSLOPE ENERGY, INC.
		(Issuer)

Date:	February 14, 2023	By:	/s/ John H. Malanga
			John H. Malanga, Chief Financial Officer,
			and Chief Accounting Officer

~~(Issuer)~~22

Date:	08/15/2022	By:	/s/ John H. Malanga
			John H. Malanga, Chief Financial Officer,
			and Chief Accounting Officer

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